Asia Pacific Real Estate Market Performance - Q4 2020 & 2021 Forecast

Due to the continued wave of the COVID-19 pandemic, the global economy has been facing different level of slowdown. The good news is that the introduction of vaccination programmes would lead to a decline in new COVID-19 infections and support the economic recovery in 2021. From CBRE Research, they expect Asia Pacific to recover from the economic recession with a positive GDP growth forecast in 2021. Also, Asia Pacific cross-border investment is recovering gradually with the volume rose 7% YOY to US$6.9 billion in Q1 2021. Cross-border investors can leverage local platforms to pursue deals during the travel restrictions. Apart from the general performance of Asia Pacific, how did the real estate market of some specific cities perform during the pandemic?       

Hong Kong

Hong Kong’s residential prices have been increasing for the past twelve years by 262%. However, due to the market-cooling measures, the US-China trade war, and the COVID-19 pandemic, the residential property price index was unchanged in 2020 from a year earlier according to the Ratings and Valuation Department (RVD). With the stable housing market, Hong Kong is still rated as the world’s most unaffordable by the 16th Annual Demographia International Housing Affordability Survey: 2020. Also, because of the extremely high price, Hong Kong rental yields are falling for all types of departments these years.

Bangkok

Because of the COVID-19 pandemic, the purchasing power of both domestic and foreign buyers decrease. In 2020, the condominium market in the suburban and midtown area is more active than projects in the downtown where the price is higher. Developers will focus on projects in the affordable segments.

Starting from 2017, the price of Bangkok condominium has been in an increasing trend. To make the price more realistic for consumers under this special market condition, developers offered attractive promotion campaigns. Under this pandemic, there were still newly launched projects, which have attractive pricing and high demand location, achieving high sales rate.

Looking forward to 2021, foreign interest in Bangkok properties remains strong. However, with the travel restriction, a high volume of sales cannot be generated through online selling. To encourage foreign investment, the Thailand government is planning to launch a five-year multiple-entry visa for buyers of Thailand properties worth THB 10 million. 

Osaka

According to JLL Research, the investment volume of Osaka in 4Q20 fell 21% y-o-y to JPY 167.6 billion. In terms of sectors, residential shared 11% of total investments. Inbound investments by overseas investors of Japanese real estate in 2020 was up 55% y-o-y to JPY 1,554.8 billion. Overseas investments were 34% of total volume, which marked the highest level since 2007. In the Osaka market, activity by overseas investors is expected to continue to be robust for residential sectors as demand is likely to be stable under the COVID-19 pandemic.

 

According to the Real Estate Economic Institute (REEI), the supply of new condominiums in Kansai for 2020 is about 13,900 units which decrease by 23% compared to 2019. One of the possible reasons behind is the government’s emergency declaration which caused the slowdown of developers. From their forecasts for 2021, they expected a total supply of 18,000 units in which 6200 and 4000 units for Osaka City and Osaka Prefecture respectively. It will increase by 10.3% and 18% from the previous year and back to the level before the pandemic. An upward trend of supply for High Rise, Medium and Large-Scale developments is expected. 

For the average selling price in 2020, they were ¥42,260,000 and ¥44,610,000 for Osaka City and Osaka prefecture (excluding the city of Osaka) respectively. Compare with 2019, they both increase by 7.6% and 14.9% respectively. From the increased average selling price of the Kansai Region, they predict that the price will continue to increase in 2021. Demand for more spacious living spaces is also expected to increase due to the strong demand for working from home.

Ho Chi Minh City 

In 2020, HCMC condominium new launch supply recorded a significant drop due to the reschedule of activity after the travel restriction. The new launch supply of condominium reached 17,272 units which decrease 35% y-o-y. The price increase remarkably especially in suburban districts in the context of the limited supply. The average selling price increase by 13% y-o-y to USD 2,150 psm.  

According to CBRE Research, they expect there will be 17,500 units of supply in suburban districts in 2021. The price will increase with a slower pace by 1-4% y-o-y in all segments except luxury. The luxury segment will increase significantly by 2-7% in 2021.